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Self-Employment and Windfall Gains in Britain: Evidence From Panel Data

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  • Taylor, Mark P

Abstract

Liquidity constraints can affect self-employment in a number of ways. They can prohibit potential entrepreneurs from starting up in business, they can restrict the growth of existing entrepreneurial activities and, in the extreme, they can result in small business failure. This paper uses British panel data to investigate the effects of relaxing liquidity constraints on self-employment through the unanticipated receipt of windfall gains. The results suggest that the amount of payment received has a positive and concave effect on the probability of entering self-employment and on the performance of an existing self-employment enterprise, consistent with the liquidity constraint hypothesis.

Suggested Citation

  • Taylor, Mark P, 1999. "Self-Employment and Windfall Gains in Britain: Evidence From Panel Data," CEPR Discussion Papers 2084, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2084
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    References listed on IDEAS

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    Cited by:

    1. Isabel Grilo & Roy Thurik, 2008. "Determinants of entrepreneurial engagement levels in Europe and the US," Industrial and Corporate Change, Oxford University Press, vol. 17(6), pages 1113-1145, December.
    2. Davis, Steven J. & Henrekson, Magnus, 2006. "Economic Performance and Work Activity in Sweden affter the Crisis of the early 1990s," SSE/EFI Working Paper Series in Economics and Finance 647, Stockholm School of Economics, revised 03 Aug 2007.
    3. Magnus Henrekson, 2005. "Entrepreneurship: a weak link in the welfare state?," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 437-467, June.
    4. Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 455-488, June.
    5. Robert W. Fairlie & Harry A. Krashinsky, 2012. "Liquidity Constraints, Household Wealth, And Entrepreneurship Revisited," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(2), pages 279-306, June.
    6. Constant, Amelie F. & Shachmurove, Yochanan & Zimmermann, Klaus F., 2003. "What Makes an Entrepreneur and Does It Pay? Native Men, Turks, and Other Migrants in Germany," IZA Discussion Papers 940, Institute of Labor Economics (IZA).
    7. Muravyev, Alexander & Talavera, Oleksandr & Schäfer, Dorothea, 2009. "Entrepreneurs' gender and financial constraints: Evidence from international data," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 270-286, June.
    8. Constant, Amelie F., 2008. "Businesswomen in Germany and Their Performance by Ethnicity: It Pays to Be Self-Employed," IZA Discussion Papers 3644, Institute of Labor Economics (IZA).
    9. Robert W. Fairlie, 2013. "Entrepreneurship, Economic Conditions, and the Great Recession," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(2), pages 207-231, June.
    10. Flores-Romero, Manuel G, 2004. "Survival Of The Small Firm And The Entrepreneur Under Demand And Efficiency Uncertainty," The Warwick Economics Research Paper Series (TWERPS) 700, University of Warwick, Department of Economics.
    11. Stephen, Roper & Jonathan M., Scott, 2009. "Perceived financial barriers and the start-up decision: An econometric analysis of gender differences using GEM data," MPRA Paper 23342, University Library of Munich, Germany.
    12. Steven J. Davis & Magnus Henrekson, 2010. "Economic Performance and Market Work Activity in Sweden After the Crisis of the Early 1990s," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 225-252, National Bureau of Economic Research, Inc.
    13. Blanchflower, David G. & Shadforth, Chris, 2007. "Entrepreneurship in the UK," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 3(4), pages 257-364, July.
    14. Andrew E. Burke & Michael A. Nolan & Felix R. FitzRoy, "undated". "What makes a Die-Hard Entrepreneur? Trying, or Persisting in, Self-Employment," Papers on Entrepreneurship, Growth and Public Policy 2005-23, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    15. Formichella, María Marta, 2008. "Educación y trabajo independiente: Un aporte a la evidencia empírica," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 26, pages 115-140, Septiembr.
    16. Andrew Henley, 2004. "House Price Shocks, Windfall Gains and Hours of Work: British Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 439-456, September.
    17. Andrew Burke & Felix FitzRoy & Michael Nolan, 2008. "What makes a die-hard entrepreneur? Beyond the ‘employee or entrepreneur’ dichotomy," Small Business Economics, Springer, vol. 31(2), pages 93-115, August.

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    More about this item

    Keywords

    Labour Supply; Panel Data; Self-Employment;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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